Best Practice

The business unit CIOs, because of their
relative freedom from daily I.T. operations,
tend to focus their attentions
on using technology and Six Sigma in
combination to improve their businesses.
For example, GE Real Estate CIO
Zupnick is always in the hunt for ways to
boost efficiencies and magnify business
opportunities by trimming unnecessary
steps in a process.

"One of my people may be involved
in a Six Sigma event process, or a
Six Sigma black belt in the company
will come to us and seek our help in
reducing the work steps in a process,"
Zupnick explains. "This is when we
identify opportunities to eliminate,
say, four steps at once, or we use a new
screen to handle or store data that is
done manually now." He calls these
"lean events."

Zupnick sees his role as the CIO
of a GE division as a business driver,
helping the general manager find ways
to use I.T. to streamline processes and
foster growth by enabling the unit to
move more quickly to seize business
opportunities. "Five weeks ago, I was
in Paris with a group of our property
management people who were trying
to reduce the steps in the tenant process,"
he says. In this case, the "tenant
process" includes a variety of steps
property managers take to qualify and
retain high-quality tenants in
the real estate developments
they manage.

"We helped them realize
that they could be more effective by
focusing not on every single tenant
equally, but instead by focusing on only
the most desirable ones whose leases
were expiring." The property managers'
time was put to more effective
use concentrating on the best tenants.
"We want to identify ways to get them
to stay on with us," Zupnick adds.

At GE, CIOs are expected to take
the initiative, bringing business-growth
projects to bear whenever possible. In
this instance, Zupnick and his team
devised a system that provides metrics
on the tenants. "It has a number of flags,
[such as] sending off e-mails and followups
alerting property managers when
the most desirable tenants have leases
that are coming up for renewal."

Zupnick says the impetus for the
custom business systems his department
builds often comes from his
own staff 's initiative. In one example,
the I.T. group came up with an idea to
use technology to give the sales team
more information on properties under
consideration for investment. "We
have been working for a number of
years with a company called MapInfo
in Troy, N.Y., on special mapping. We
developed and integrated mapping
with our loan portfolio. This enables
our salespeople to see what other deals
we have in, say, Walnut Creek, Calif.
It also helps them understand the
other issues in the area, things like the
crime rate, growth projections, and
mass-transit access to the site, which
is very important."

According to Zupnick, his department
turned the application into an
internal GE product called Market at
a Glance. A salesperson might have 50
deals under consideration, but have
only five or six under close watch.
"Market at a Glance helps them focus
on that one deal and its area and see, for
instance, if four out of five other deals
we have in that area are outperforming
the market, or maybe only two out of
six are outperforming the market," he
says. In other words, the system allows
the sales staff to immediately compare
the chances of a deal outperforming
the market-or conversely, doing more
poorly than other deals in the area—based
on its location.

"The businesspeople might have
come to that idea five years from now,"
Zupnick admits. "But my I.T. people,
with their knowledge of spatial mapping,
brought that idea forward and
said, 'Let's go for it.'"

Whither I.T. In a GE Breakup?

In response to the stock's sluggishness
and the perception that the
company is hindered by slow growth,
CEO Immelt continues to push GE
into faster-growing businesses such as
health care and aerospace, while shedding
older industrial lines such as plastics
that have put a drag on financial
performance. Between 2003 and 2006,
GE acquired businesses worth $80 billion
and sold off units worth $35 billion. But
those moves may be too little, too late
for GE shareholders.

Regardless, one big question remains:
How would GE's I.T. operations fare
if the company's half-dozen business
units—and possibly even some of its
larger operating divisions within those
units—were spun off to stand on their
own, or sold to other companies or
investment groups?

"I think that GE's I.T. would fare well,
especially versus the average company's
I.T., because of the GE mind-set," says
Hackett Group's Holland. "They are all
accustomed to have the same kinds of
control structures in place, and if put on
their own, they would go out and create
almost the mirror images of what they
had with the mother ship."

The loss of certain efficiencies
enabled through shared services,
though, would be an added cost that
the various spun-off businesses would
have to absorb. "If they were operating
as independent, separate business
units, there would be a huge cost associated
with that because of the synergies
they had been leveraging under
GE," Holland observes.

In the meantime, breakup or no, GE's
I.T. strategy—embracing Lean Six Sigma,
a centralized/decentralized management
structure and a progressive corporate
training regimen for CIOs that is second
to none—stands alongside its
stellar record of profitability as
a gold standard for I.T. management
practices.

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